Fi­nan­cial by Gail Gadd

Hills to Hawkesbury Living Magazine - - In this Issue - by Gail Gadd

We all know that the only way to have money in re­tire­ment is to save now. By sav­ing, I mean that we need to make con­tri­bu­tions to our su­per­an­nu­a­tion. There are sev­eral kinds of con­tri­bu­tions that can be made.

Non-Con­ces­sional con­tri­bu­tions are con­tri­bu­tions made from af­ter-tax money where no tax re­fund has been claimed. You may con­trib­ute $180,000 per year. There is a pro­vi­sion to pay 3 years-worth of con­tri­bu­tions un­der the ‘Bring for­ward Rule’ which is capped at $540,000 un­til 1/07/17.

If you have con­trib­uted more than $180,000 then you have trig­gered the Bring For­ward Rule’ and you will be able to con­trib­ute the fol­low­ing over the com­ing years. (see graph above)

From 01/07/2017, there will be a new an­nual $100,000 limit and a max­i­mum of $300,000 on the Bring For­ward Rule’. This will be in­dexed in $2,500 in­cre­ments with the Con­ces­sional Con­tri­bu­tion Cap of $25,000. The Non-Con­ces­sional Cap will al­ways be four times the Con­ces­sional Cap. How­ever, if you have a total su­per­an­nu­a­tion bal­ance of $1.6m or more, you will not be able to make Non-Con­ces­sional Con­tri­bu­tions.

A Con­ces­sional Con­tri­bu­tion is a con­tri­bu­tion to su­per­an­nu­a­tion made from be­fore-tax money. The max­i­mum amount that you may con­trib­ute from 2017/8 is $25,000. How­ever, if you are over 49 years of age you may still con­trib­ute $35,000 be­fore 30/06/17. Con­ces­sional Con­tri­bu­tions in­clude Su­per Guarantee, ad­di­tional em­ployer con­tri­bu­tions and salary sac­ri­ficed con­tri­bu­tions. Those who are self­em­ployed must lodge a no­tice of in­ten­tion to claim as tax deduction with your su­per fund.

One of the traps here is that the Su­per Guarantee con­tri­bu­tions count to­wards the cap so check what you have con­trib­uted be­fore mak­ing a salary sac­ri­fice. There are penal­ties for ex­ceed­ing the caps. Also, if you earn more than $300,000 you will be sub­ject to an ad­di­tional tax of 15% tak­ing the total tax on your con­tri­bu­tions to 30%. From 2017 this will ap­ply to those earn­ing $250,000 or more.

The Gen­eral Trans­fer Bal­ance

Cap of $ 1.6m is part of the new Su­per­an­nu­a­tion re­form laws and will come into force on 01/07/2017. This means that a total of $ 1.6m may be trans­ferred into the tax-free re­tire­ment or pen­sion phase but it will be sub­ject to in­dex­a­tion. All su­per pen­sions and an­nu­ities will count. How­ever, Tran­si­tion to Re­tire­ment Pen­sions are ex­empt. Do not ex­ceed this cap be­cause you will not be able to make any fur­ther trans­fers there­after.

HOW TO CON­TRIB­UTE THIS FI­NAN­CIAL YEAR?

Make A Non-Con­ces­sional Con­tri­bu­tion of $540,000 and use the ‘Bring For­ward Rule’; Make a $180,000 Non-Con­ces­sional Con­tri­bu­tion and use the ‘bring for­ward rule’ to con­trib­ute a fur­ther $300,000 in com­ing years; Make a Con­ces­sional Con­tri­bu­tion of $25,000 to $35,000 depend­ing on your age; With­draw part of your Und­e­ducted Non-Pre­served (UNP) por­tion to en­able you to con­trib­ute to your Su­per Bal­ance. Most im­por­tantly, seek pro­fes­sional ad­vice about your spe­cific sit­u­a­tion and plan ahead.

Gail Gadd is a Spe­cial­ist Fi­nan­cial Plan­ner with Life­span Fi­nan­cial Plan­ning Pty Ltd AFSL 229892. This ar­ti­cle aims to pro­vide in­for­ma­tion about the new Su­per­an­nu­a­tion reg­u­la­tions. It does not pro­vide per­sonal or spe­cific ad­vice and any com­ments should be viewed as GEN­ERAL AD­VICE only.

Source: Colo­nial First State – Life­span Ad­viser Brief­ing 16/2/2017

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